PPF vs KVP vs SSY: Why Post Office Small Savings Schemes Are In Trend Now?

For most middle-class households, the primary explanation for not investing adequately is that the wealth is not sufficiently ample to conceive about stowing something away as investments. Not everybody can continue to invest in mutual funds or avoid sinking themselves into investments that are linked to the dynamics of the market. And considering these types of investors investment vehicles such as Sukanya Samridhi Yojana (SSY), the Public Provident Fund, Kisan Vikas Patra and the National Savings Certificate can be a good bet, but why and how? So let’s start revealing the facts here:

Taking SSY as an example, it currently offers a return of 7.6 per cent with a maximum amount of deposit restricted at Rs 1,50,000 with a maturity period of 21 years. Interest rates on fixed bank deposits, as well as savings accounts, deteriorated rapidly, particularly after pandemic and lockdown. From the period of the investment to the maturity date of your investment, the rate of interest remains stable and assured when it comes to post office small savings schemes. Not only these small-scale strategies help you handle your regular expenditures, but they also allow you to generate good wealth in the long-term. Small saving strategies sponsored by the government allow small-income holders to invest in order to gain high returns and cherish tax benefits as well.

One such example is the National Savings Certificate (NSC), which is a guaranteed return saving instrument that is worth noting in this respect because it gives a fixed return to investors and is suitable for individuals with low-risk appetite. Not only fixed returns but also a sovereign guarantee for investors as an add-on benefit also comes small savings schemes for low risk-appetite investors. With these schemes, the principal amount of small-time investors is still safe and the interest is due on a quarterly basis according to the prevailing rate of income tax based on your income. For senior citizens, such schemes are often suitable. Initiatives like the Senior Citizens Saving Scheme, far above the fixed deposits of every bank, offer interest as high as 8.7 per cent every year. Other schemes, such as the NSC, offer a stable return of compounding benefits over a term of 5 years.      

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